Jobs fear as Clinton Cards collapses into administration
Wednesday 09 May 2012
More than 8,000 jobs were on the line today after Clinton Cards became the latest casualty of the high street spending slump.
The group, which is the UK's biggest specialist cards retailer and operates 628 Clintons and 139 Birthdays stores, collapsed into administration after failing to find a buyer for all or parts of the business.
Administrators at Zolfo Cooper said the group had made losses of £130 million since 2004 and it was "likely that a number of stores would need to be closed to make the business financially viable".
Zolfo will continue to trade the business as a going concern and said it remained confident it will be attractive to potential buyers.
Clinton's plight was sealed after its banks - Barclays and taxpayer-backed Royal Bank of Scotland - sold the company's £35 million of loans to its biggest supplier.
But whereas the banks waived certain conditions, American Greetings told the company it planned to enforce the loan, pushing the company into an administration process.
The collapse is another blow to the high street after recent high-profile casualties, including video games retailer Game Group, fashion chain Peacocks and outdoor specialist Blacks Leisure.
The group is the UK's largest specialist retailer of greetings cards and was founded by current chairman Don Lewin in Epping, Essex, in 1968.
Peter Saville, joint-administrator at Zolfo, said the company suffered "extremely challenging" conditions, particularly at Birthdays, but added that there was a strong underlying business.
He said: "Despite evaluating ways to restructure the business, Clintons was unfortunately unable to secure adequate support or funding for its restructuring plans.
"The challenging business environment, and in particular the increased competition for greetings cards and related products, meant that the group required radical restructuring, and administration was the last remaining option available."
Ohio-based American Greetings said Clinton was one of its largest customers in a relationship dating back 40 years.
It has bought £35 million of senior debt but said it is also owed around 25 million US dollars (£15.5 million) as an unsecured creditor.
The company recently stopped shipping products to Clinton because of late payments and said it believed other suppliers had done the same.
By buying Clintons' senior debt and putting it into administration, American Greetings became a secured creditor, giving it a greater say in its rescue.
American Greetings chief executive Zev Weiss said he hoped Clinton could survive following a restructuring, adding that his company might ultimately become an owner of the business or continue to supply another buyer.
Clinton has suffered dire trading in recent months as it comes up against stiff competition from supermarkets and online retailers such as Funky Pigeon and Moonpig, which sell personalised cards.
It recorded a pre-tax loss of £3.7 million in the 26 weeks to January 29, compared with a profit of £11.7 million in the previous year, and warned that the second half of the year would be below expectations. Its shares had lost more than 80% of their value since the start of 2010.
Today, it revealed more poor trading for the 14 weeks since January 29, with same-store sales down 3.5%.
Chief executive Darcy Willson-Rymer has carried out a strategic review over the past six months, which is understood to have included a fruitless search for a buyer for all of the business or its Birthdays chain.
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